4 Mental Models for Leading Through Uncertainty

Uncertainty abounds in our world, where rapidly unfolding events, mass marketed misinformation, market risks, political instability, climate change, and a host of other conditions compound to challenge even the most disciplined leaders. Worse, all of this is perpetually amplified as velocity of change continues to accelerate over time.

Meanwhile, researchers have found that under pressure and uncertainty, cognitive biases and fears play an outsized role to influence decision-making.

It’s not a compelling mix: At a time of great need for clear thinking to inform critical decisions amid uncertainty, leaders are more likely to be unconsciously hobbled.

The sustainable path forward includes incorporating deliberate structure in the form of mental models to guide your thinking when it matters most.?

Here are four proven mental models that will help you think more clearly, make better decisions,? and act more decisively, not only in uncertain times, but all the time. To facilitate implementation, each mental model is accompanied with a few key questions to help you put it to work:

1. Essentialism

“We struggle with the complexities and avoid the simplicities.”? – Norman Vincent Peale

Success isn't about doing more things—it's about doing the right things with exceptional focus. The mental model of essentialism, or concentrating on what’s truly necessary, helps leaders cut through noise and distraction to identify and then act upon what really matters. The core principle here is that complexity doesn't scale. As any organization grows, leaders must become increasingly selective about where they focus time and resources.

Begin by defining the essential for your organization. First create a crystal clear vision of what you intend to accomplish and achieve in the next three years, including the small number of key capabilities that must be developed or enhanced for you to get there. Next, identify the #1 Addressable Challenge that must be resolved this year as you begin the journey to your three year destination.?

This clarity makes it easier for you to prioritize what must be done, to eliminate non-essential activities and initiatives, and to stay true to your aspirations.?

Along the way, you’ll need the resolve to disappoint people by saying “no” to efforts that don’t align with what’s essential so you can deliver emphatic "yeses" to items that advance your cause.

Key Questions:

• What must you say "no" to in order to protect your top priority?
• Where has unproductive complexity crept into your operation?

2. The Stockdale Paradox?

“Face the facts of being what you are, for that is what changes what you are.”? – Soren Kierkegaard

Admiral James Stockdale was the highest-ranking American military officer captured during the Vietnam War. He spent eight gruesome years in the "Hanoi Hilton" as a prisoner of war, where he was repeatedly tortured. Yet by his own account, Admiral Stockdale emerged from the camp stronger than when he entered.

It turned out that both optimists and pessimists died in the camp. Stockdale noted that optimists died of broken hearts, having their hopes for release and return home repeatedly crushed. The pessimists had no hope, gave up, and lost the will to survive. Stockdale survived because he retained faith that regardless of the reality and difficulties of his horrendous circumstances, he would prevail and emerge stronger.

Here's the paradox: he continually confronted the brutal facts of his current reality while simultaneously expecting that he would eventually emerge as a better version of himself. As a leader, you can harness the Stockdale Paradox mental model, acknowledging the brutal facts about your organization and what it faces while expecting you’ll strengthen through the adversity and see better times ahead.?

We saw the same approach among successful leaders and organizations during the COVID-19 pandemic. Those who were able to recognize the brutal reality of what they faced while simultaneously believing they and their teams would make it to the other side, made it, while those who were overly optimistic (“relax, this will all be over in a couple of months”) or pessimistic (“it’s going to be impossible for us to survive this”) didn’t.?

Key Questions:

• What brutal facts about your business have you been reluctant to face?
• How effectively are you communicating both current challenges AND your unwavering faith to your team?

3. Return on Luck

“Luck is a dividend of sweat. The more you sweat, the luckier you get.”? – Ray Kroc

Author Jim Collins uncovered something fascinating while researching successful companies for his book Great by Choice: HIgh performing firms weren't any luckier than their less-successful counterparts. As Collins explains: "When we study this over and over again, what we find is we're all hit in life with different kinds of luck. But a huge swing variable is there are those who grab it and then get a high return on that luck, and there are those who fritter it away."

Here’s the gist of his research: Over time, there is a roughly equal distribution of "good" and "bad" luck affecting individuals and businesses. What makes the biggest difference is how you and your team respond, regardless of whether they are “good” OR “bad” luck events.

Consider how different leaders respond to winning a major account (a “good” luck event):

One might think, "This is fantastic, let's celebrate and relax; we've achieved some security," using it as an opportunity to catch her breath. By leaning back after a big win, she'll probably generate a fair to poor return on this good-luck event—and miss the chance to further capitalize on it.

Another might think, "Wow, we just won this big account. We've got momentum, so let's double down and create a new program to help our salespeople continue to crush it in the market." This approach will likely lead to a much higher return on the same event.

Are you harnessing the benefits of the Return on Luck mental model, regardless of what’s thrown your way? Always seek to maximize Return on Luck, whether good or bad: Capitalize on positive circumstances, find opportunity in setbacks, and build resilience in your team along the way.?

Key Questions:

• Think of a recent negative event that affected your business. How can you generate a positive return on this situation?
• How can you incorporate the Return on Luck mental model into your firm's culture?

4. Bias to Act

"In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing." ? – Theodore Roosevelt

In rapidly changing environments, standing still—or failing to take action—equals falling behind. The idea of the status quo is an illusion which, in fact, doesn't exist; you're either advancing or losing ground as the world evolves around you.

While thoughtful planning matters, leaders must maintain a bias toward action. The cost of inaction often exceeds the cost of imperfect action. Forward momentum, even if not perfectly directed, creates opportunities for learning and adjustment that stagnation never will.

I use an “80%” technique with my coaching clients to help them resist overthinking and stagnation in favor of taking action. As long as there is 80% alignment, certainty, or confidence in a decision or choice, it’s time to move forward and act. Once in motion, it’s usually quite easy to tweak and course-correct well beyond the 80% mark. But if you shoot for 90-100% confidence as a precursor to act, there’s a high probability you’ll get stuck and delay taking action.

For many organizations, “good enough” is often a victim of “perfect,” slowing momentum and growth. The Bias to Act mental model is the answer.

Key Questions:

• Where are you delaying action even though you know what needs to happen?
• How can you amplify the voices on your team that generally advocate for action rather than delay?

Conclusion

“Fear is often our immediate response to uncertainty. There’s nothing wrong with experiencing fear. The key is not to get stuck in it.”? – Gabrielle Bernstein

Welcome to the “new normal.”

The velocity of change is accelerating and, most likely, won’t ever slow down. Making the right, timely decisions for your organization can be perilous, yet you must act to pursue your goals and to avoid falling behind as others advance around you.

Taken together, these four mental models are key to reducing the influence of fear and unhelpful cognitive biases, to making better decisions, and to successfully navigating uncertainty toward the future you want:

1. Essentialism
2. The Stockdale Paradox
3. Return on Luck
4. Bias to Act

Study them. Master them. Share them with your team.

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